Ann: SIMEC Exclusivity Extended on Iron Ore Projects, page-3

I see this as a positive. SIMEC would have walked away if not really interested. HAV needs to make a deal with someone to get some cash.

Therefore, prospects of a deal I think are good. It will be the deal structure where the negotiations will be difficult. HAV needs some cash now and Gupta knows the difficulties in raising finance.

If I was HAV management, I would consider something like:
* SIMEC to pay $1m per month until production commences
* SIMEC have four years to commence production, otherwise penalty payment of $20M for a two year extension or project reverts 100% to HAV
* SIMEC to sole fund project with HAV to retain 10% fee carried interest - is 10% of profits to HAV - possibly with an option for SIMEC to buy out HAV's interest at any time up to 2 years after commencement of production for $250M (with this amount to be indexed).

The above allows SIMEC to defer the majority of the costs until construction, but go to IPO for Whyalla with long term cost effective ore for expanded production. It also allows HAV some cash flow to pay some bills and do a little bit of exploration for the next few years and get a slice of the future from its iron ore projects. Therefore, win win for both parties.

The alternative to the above would be shares in Whyalla IPO but much more difficult to quantify the value of that at this stage and would need to specify minimum $ value and or percentage share of company on IPO. But other difficulty would be that HAV shareholders would want the Whyalla IPO shares distributed to them rather than leaving them in the hands of HAV management.

If there is a deal to be done, I just hope that they get someone truly independent and properly experienced to review the final deal before they sign.